The International Financial Reporting Standards (IFRS), developed and administered by the International Accounting Standard Board (IASB), provide a globally acceptable uniform framework for the preparation and presentation of financial information of profit-oriented entities. About 145 countries have already adopted the standards, and many are in the process of doing so. Some of the big names in the list include major economies such as the European Union, Brazil, Canada, Australia, and Japan, among others. Although the United States has not officially adopted the IFRS as its primary accounting standard, in 2007, however, the SEC approved the use of IFRS for the filing of financial reports in the US by foreign quoted entities that use IFRS in their countries. In 2008, the SEC also presented a roadmap for adopting IFRS for all US publicly quoted companies. At the moment, companies within the US may choose to account for their finances under GAAP or IFRS.
The widespread adoption of IFRS has been driven by the need to create a common global accounting and reporting framework to enhance transparency, comparability, and reliability of financial information across international borders, especially following. the global economic crisis of 2007 to 2009, which was largely attributed to fraudulent accounting practices.
The International Financial Reporting Standards (IFRS) was originally conceived and designed for quoted companies (companies listed on the Stock Exchange) where the requirements for accountability and transparency are of paramount importance to shareholders. The enormous cost of implementing full IFRS cannot be justified for Small and Medium Enterprises (SMEs). As a result, it became necessary to issue a scaled-down version of IFRS that is suitable for Small and Medium Enterprises (SMEs).
The term SME has been defined differently by various jurisdictions, based on personnel size, annual turnover, or balance sheet total. However, none of these definitions is helpful when it comes to determining the eligibility for applying the IFRS for SMEs. According to IASB, IFRS for SMEs is designed for "
entities that have no public accountability." What this means is that any company not listed on the Stock Exchange, or not a Public Limited Company (PLC), is eligible to apply IFRS for SMEs, and not the full IFRS. IFRS for SMEs is neither independent nor a separate set of standards although they have a separate framework. They are modifications and simplifications of the full Standards undertaken to make the Standards suitable and convenient for SMEs.
Irrespective of whether an entity is applying the full IFRS or the SME version, the task of implementing the standards, and the continued compliance with its policies can be quite daunting. This book, which is a product of my more than ten years of field experience as an IFRS and IPSAS system specialist, is meant to address and ease the challenges of IFRS implementation and compliance.
This book is not a compendium of Standards under the IFRS; it is a practical guide to the accounting treatment, based on IFRS accounting policies. One thing that makes this book so different is its presentation format: All IFRS measurements and recognition policies are explained and backed up with relevant accounting entries in the double-entry format.
IFRS ACCOUNTING MANUAL FOR SMALL AND MEDIUM BUSINESSES is based on the solution algorithm by a software solution analyst, with several years of experience in the design, development, and implementation of accounting software solutions. Industry professionals implementing IFRS, and students of accounting, will find this book quite helpful.
